Godrej Consumer Products' Q4FY18 results (Outperformer) - Strong volume growth outlook for FY19!
Q4FY18 result highlights
- Consolidated revenues were up 4.8% yoy at Rs25bn (est: Rs25bn); EBITDA increased 6.4% yoy at Rs5.7bn(est: Rs6.2bn) and Adjusted PAT increased 12% yoy at Rs4.2bn (est Rs4.4bn).
- Comparable revenues increased by 4% yoy, with India business revenue growth of 7% yoy and International business sales growth of 1% yoy (constant currency growth of 6% yoy).
- India sales were led by 6% yoy volume growth (secondary sales of 10% yoy). On comparable basis, Soaps sales grew by 19% yoy while other brands grew by 34% yoy. HI sales declined by 5% yoy while Hair color sales grew by 3% yoy.
- Consolidated gross margins were up 180bps yoy. Advertising spends were up by 80bps yoy to 7.3%. Staff cost and other expenses increased by 9% and 6.7% yoy respectively. Resultant EBITDA margin increased by 40bps to 22.9%.
- In international business, Africa, Latam and Europe sales increased by 7%/28%/11% while Indonesia sales declined by 6% yoy in constant currency terms.
Key positives: Healthy gross margin expansion
Key negatives: Weakness in HI & international business performance
Impact on financials: We have increased our FY20E earnings by 2%.
Valuations & view
GCPL’s performance for FY18 was impacted by continued weakness in domestic HI business, Indonesia business and weak profitability in Africa & Latam region. Given the signs of recovery in HI and healthy innovation pipeline, domestic volume growth trajectory is likely to remain strong. International business sales are likely to see improvement led by gradual recovery in Indonesia and steady growth in Africa & Latam business. Moreover, the benefit of favorable palm oil covers and cost saving programs provides enough headroom to invest behind brands as well as maintain profitability. Further, continued focus on reducing working capital (as demonstrated in FY18) will aid sustained improvement in return ratios. We maintain our positive longer term outlook and Outperformer rating on GCPL.
Godrej Consumer Products is a consumer goods company, manufacturing and marketing Household and Personal Care products. Co. is engaged in the manufacture and sale of soaps, cosmetics and detergents. Co.'s Personal Care products include Godrej No.1 - soaps; Cinthol - soaps, deodorants, talcs and shower gels; Godrej protekt - washes, a hand sanitiser and a personal mosquito repellent spray; and Godrej expert - creme hair colour in a sachet, powder hair colour with a unique gel technology, and herbal hair colour. Co.'s home care products include Good Knight - mosquito repellents; HIT - household insecticides; Godrej aer - home and car air fresheners; and Godrej Ezee - liquid detergents.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.